EHang Holdings Limited ADS 2026 Q2 Earnings Call

Thank you all for joining us on today's conference call to discuss the company's financial results for the second quarter of 2026. The earnings release is available on the company's IR website. Please note the conference call is being recorded, and the audio replay will be posted on the company's IR website. On the call today, we have Mr. Hu Huazhi, our Founder, Chairman, CEO, Mr. Feng Choi, CTO, Mr. Wang Zhao, COO, and Conor Yang, CFO. Before we continue, please note that today's discussion may contain forward-looking statements made pursuant to the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.

The company does not assume any obligation to update any forward-looking statements, except as required by law. Also, please note that all numbers presented in RMB are for the second quarter of 2026, unless stated otherwise. With that, I'll turn the call to our CEO, Mr. Hu Huazhi. Please go ahead. Good day, everyone. Thank you for joining our Q2 earnings call. Since Q2, EHang has entered a vital strategic transition, moving beyond the certification toward operational readiness, scenario validation, capability development, and global expansion. Certification is just the entry ticket into commercial operations. What really determines whether a company can sustain flights and scale commercial operations is not just about having an aircraft or a certificate. It's about having an end-to-end operational capability, replicable solutions, a solid product pipeline, and the ability to deliver standardized solutions to global markets.

We have been investing in these areas and have made meaningful progress. Of course, all of these rely on a sound regulatory environment. That's the foundation that enables qualified, capable companies to grow. In late June, a serious accident involving a piloted light sport aircraft in China has led regulators to adopt a more cautious approach to safety oversight. While unrelated to EHang's pilotless vehicles, this has affected our human carrying commercial operations approval process in Hefei, and the timeline remains uncertain. To be clear, this is a temporary industry-wide timing issue. It reflects no change in the delivery of EHang's products, nor does it indicate any issue with our technology or safety record. Recent accidents highlight that safety, regulation, and traceability are baselines for low-altitude commercialization. EHang operates with a pilotless aircraft, pre-set of fixed routes, intelligent fleet dispatching, centralized monitoring.

Our goal is to make urban air mobility safer, more transparent, and easier to regulate. Pilotless passenger carrying aviation fundamentally changes how we travel. We fully understand the regulators' caution, and we respect that. It is a responsible commitment to public safety. However, technology, innovation, and regulation must evolve together. More than a century ago, when automobiles first appeared, people had similar concerns about this new form of transportation. The U.K. passed the Red Flag Act, which required a person to walk in front of a motor vehicle carrying a red flag to warn pedestrians and limiting vehicles speed. The law was essentially old rules over-regulating new technology. History shows that safety validation, operational rules, and regulatory frameworks for disruptive transportation technologies all take time to mature. History shows technology and regulation eventually align. New forms of transport don't mature overnight.

EHang's role isn't to sit and wait, but to proactively provide regulators with real safety data, proven operations, and a reliable technology. The EH216-S and its operating system have obtained all key certificates under China Civil Aviation regulatory framework, TC, PC, Airworthiness Certificate, and Air Operator Certificate. Our end-to-end system in Guangzhou and Hefei are fully operational. Within our internal trial operations, both sites have been operating continuously and safely for around 1.5 years with a 4.94 out of 5 passenger satisfaction score. The EH216 series have accumulated nearly 100,000 safety flights. With the demand of product certification safety records in place, we only await regulatory approval for public ticket sales. Despite this critical transition point, we are confident that commercialization window will eventually open. Amidst uncertainty, EHang isn't sitting still. We're tackling challenges head-on and finding new opportunities.

Since Q2, we've been pushing hard on three things. First, expanding globally on multiple fronts, strengthening domestic readiness while accelerating overseas deployment. In China, we continue to strengthen our end-to-end operations to develop standardized or replicable operating models and solutions. We have completed preparations across full operating cycle, including personal training, maintenance, insurance services, airspace coordination, and emergency response in Guangzhou and Hefei, accumulating practical operating experience. We initiated point-to-point trial operations to build experience in advance. Once the regulatory window opens, we will rapidly deploy and help customers operate to standard. Overseas, our footprint expanded to 23 countries, adding Mexico and Switzerland since Q2. Thailand is running validating flights via sandbox, and the Civil Aviation Authority of Thailand has established a clear path forward. We're targeting a commercial approval in 2026.

We were also selected for Hong Kong's Low-altitude Economy Regulatory Sandbox X trial projects with flight validation underway and a public demo coming soon. Furthermore, we advanced our Global Fast Track Program. Many countries want to bring in pilotless eVTOLs, but lack the regulatory framework on how to build the complete path from safety validation to operational standards to commercial deployment. Drawing on a decade experience, as well as our engagement with the civil aviation authorities in multiple countries, EHang is turning this experience into a standardized market entry framework. This is the basis of our Global Fast Track Program. It's not simply about selling an aircraft. EHang is providing a standardized methodology from validation to operational preparation to commercial deployment, helping global regulators and partners move more efficiently.

Sri Lanka has become the first country to join our Global Fast Track Program, and we're also engaging with multiple other countries regarding framework. This shifts our global strategy from merely selling products to exporting experience, standards, and capabilities. Second, revenue diversification. Keeping passenger transportation as our strategic focus while developing non-passenger carrying business and a broader product portfolio. Passenger mobility remains our strategic focus while domestic passenger commercialization is still pending regulatory approval. We're actively developing logistics, firefighting, and aerial media to build additional revenue streams. We're developing and validating logistics and firefighting aircraft based on our passenger-grade safety technology. These products address real needs such as forest firefighting, portal logistics, and emergency response. They are moving through testing certification and customer validation with the potential for faster market deployment.

Alongside steady progress on the EH216 platform and the VT-35 certification and flight test, EHang is building a multi-scenario product matrix rather than relying on a single aircraft. Meanwhile, aerial media revenue surged over 270% year-over-year in Q2, and now expanding to Europe, Japan, Thailand, and other overseas countries. We're expanding one-off event performances to regular on-site shows for sustainable revenue and replicable business models. Third, improving cost efficiency and focusing our resources on long-term competitiveness. Since Q2, we streamlined the organization, refreshing talent structure, cutting non-essential complex, improving efficiency. The outcomes will be visible in the second half. We are focusing resources on things that matter most. Core product development, certification capability, operating system, overseas commercialization, and business that can generate revenue, deliveries, and cash flow. Over the past decade, EHang's core strength has been getting aircraft flying and operations running.

Now we're turning that into a standardized scalable capabilities. Customers value our ability to guide them from zero to commercial operations, not just the aircraft itself. We are validating our developed capabilities in China and scaling them overseas. Two tracks reinforcing each other. The demand is real, and the path is proving out. Now we're focused on execution, converting operational capability into orders, deliveries, and cash. Finally, EHang is building a long-term business. We are breaking technology barriers and help shape industry rules. While navigating evolving regulatory frameworks requires careful management, our long-term vision remains unchanged. The end game for low-altitude mobility remains pilotless flight, but regulation and ecosystems take time to mature. Short-term friction will not alter our direction. When the window opens, EHang will be the first one through with the credentials, capabilities, and the readiness.

The moat we're building through standardized operations will only get deeper. The strategic direction of the low-altitude economy will not be disrupted by short-term volatility. For 12 years, EHang has focused on making safe life accessible. We will maintain a pioneer's discipline and execute what needs to be done. Thank you. I would like to invite our CTO, Feng Chuai, to introduce our latest progress in technology and R&D. Thank you, Mr. Hu, and hello everyone. In Q2, our R&D focused on three aspects. First, we continue to upgrade existing products and validate operations for current customers and scenarios. Second, accelerated R&D for new products and new applications. Third, deepen core underlying system capabilities. These three aspects together build a more completed technology foundation for scaled commercial operations. First, upgrading the existing products and operational validation.

This quarter, we completed a series of operations and validations for EH216-S route operations. We established our first point-to-point test route at our Guangzhou headquarters, continuously accumulating trial data. This marks a meaningful step, moving EH216-S operations from a single point takeoff and landing toward a regular route-based operations. On passenger experience, we completed several key updates. We validated the operational capability of our new battery cooling vehicle. Under test conditions, it increases daily orders per aircraft from about 6 to 12 to 15, a meaningful boost for daily capacity. With the same fleet infrastructure, each aircraft can handle significantly more flights per day, which matters a lot for operational efficiency and unit economics. Additionally, our new independent air conditioning system rapidly reduced cabin temperature by 10 to 15 degrees Celsius, enhancing passenger comfort. Second, new product development and scenario expansion.

For the VT-35, we completed a truck wind tunneling testing and the lightning direct effects, and LDE protection testing for key components alongside multiple flight tests in China to support aerodynamic collaboration and airworthiness validation. Meanwhile, we are extending our technology into new applications. For forest firefighting, we are testing air bust delivery system with our existing product to enable early-stage crown fire response. Based on the EH216-S platform, we are also developing a cargo version. Adapting this mature platform is expected to shorten development and certification timelines. Our prior work on the EH216-L will also be integrated into this new configuration, ensuring logistic capability continuity. Third, deepening core systems. On the operational system front, we are building differentiated product capabilities for two key customer types. First, low altitude operations control system for operators and aircraft consumers. Second, city-level low altitude integrated supervision platform for government agencies.